Global Europe 'still in business'

THE European arm of ailing telecoms group Global Crossing has enough money to pay staff and continue servicing its British clients. The American group, which has debts of almost $12bn (£8.5bn) and on Monday filed for Chapter 11 bankruptcy protection, said its operations in Europe were still trading and solvent.

European president Dan Wagner said the future of his unit was now subject to restructuring talks with its parent backers, but that it had secured funding to allow it to keep trading.

Global, which bought Racal Telecom two years ago, has found a saviour in the form of the Hong Kong telecoms investor Hutchison Whampoa and its partner Singapore Technologies Telemedia. They have agreed to invest £535m for a majority stake.

A Global spokesman refused to rule out cuts among its 1,800 UK staff, but said they were safe until the Asian investors negotiate a compensation package with Global's bondholders and devise a new strategy for the firm.

Bondholders are expected to get a mixture of cash, shares and new bonds, while shareholders will lose everything. The shares, down 98% in the past year, were halted in New York on Monday after plunging 21 cents or 41% to 30 cents in pre-market trading.